HC Deb 21 June 1907 vol 176 cc781-800

Order for Second Reading read.


It will be for the convenience of the House if I make a few observations in moving the Second Reading of this Bill. I should like to say that the Bill has nothing whatever to do with the telegraph service. It refers solely to the telephone service. It has further no connection with the proposed purchase of the National Telephone Company's system in 1911. Its object is merely to enable the post office to carry on and extend telephone service up to that date. I agree with my hon. friend the Member for Preston, who has placed on the paper an Amendment to the Bill, that, from the financial point of view, the telegraph and telephone services should be, kept as distinct as possible, in order that we may know how far the telegraph service is carried on at a loss, and how far the telephone service is carried on, on a fair commercial basis, at a profit, and on its own merit;. This Bill is merely a continuation of previous Telegraph Acts for the purpose of raising capital for the telephone service. The first of these Acts was passed in 1892, when £1,000,000 was granted by this House for the purchase of the trunk lines from the National Telephone Company. There were further Acts in 1896–98–99 under which £3,300,000 were raised for the same purpose; and finally, in 1904 a further sum of £3,000,000 was raised for the purpose of extending the telephone system. The total amount so far raised for telephone purposes is £7,300,000. Out of that £3,400,000 had been spent on trunk lines, £2,600,000 on the London exchange system, and about £500,000 | on the provincial exchanges, the balance being in regard to stores and the purchase of municipal systems. Since the first line was purchased from the Telephone Company the mileage of trunk lines has increased from 29,000 to 145,000 miles, and the total mileage, London and provincial, is now 328,000, showing a very large increase in the telephone system. The further £6,000,000 which I now ask the House to vote will, it is hoped, carry on the extension of the telephone system up till the end of 1911, when the system of the National Telephone Company will be purchased by the State. Whether it is an advantage to have allowed the two systems to be continued so long is a matter of controversy. Though by agreement we might possibly purchase the National Company's system before 1911, I do not think that that would be satisfactory. The chief items of this £6;000,000 which I now ask for are £2,800,000, to be spent on the trunk system, £1,800,000 for the London Exchange system, and £1,000,050 for provincial exchanges. I would point out that this money is to be raised on loan for a very short period. Some of the earlier annuities on which the capital was raised were for twenty years. That was thought to be too long a period for loans of this nature, and we shall now raise the money on terminable annuities for fifteen years. Further, so far as the expenditure of the Post Office is concerned, hon. Members will see that the Treasury has full control over it. Every particular of proposed expenditure has to come before the Treasury before that expenditure can be undertaken. The protection under this loan is, I think, very complete, because the period is very short. I put the Bill before the House as a business proposition. While the telegraph system of this country is unfortunately carried on at a very considerable loss, the telephone system is being carried on at a satisfactory and substantial profit. After providing for 3 per cent. interest on the capital expended, and allowing sufficient for depreciation of the plant, the profit left during the last financial year was £37,200, representing a certain interest per cent. on capital, in addition to the 3 per cent. for which provision had already been made, The London exchanges show a considerable profit, and so do the trunk lines, but the provincial lines show some loss. I can only say that, as far as I am concerned, I think that the telephone service should be carried on on a business basis and that rates charged should provide a substantial profit to the State. It is a great mistake to carry on the telegraph or telephone system in any other way. But everyone who has looked into the figures agrees that in regard to the telegraphs the original capital was inflated, and that at the present moment we are carrying it on at a loss quite irrespective of the interest on the original capital. From that awful example we should endeavour to profit in working the telephone system, which should be conducted on business lines. I beg to move."

Motion made, and Question proposed, "That the Bill be now read a second time

*MR. HAROLD COX (Preston)

said that he rose to move, "That it is undesirable to authorise further capital expenditure upon telegraphs or telephones until a full statement has been presented to Parliament showing the financial results of the past working of the Post Office telegraphs and telephones judged from the standpoint of an ordinary commercial undertaking." The hon. Member said the Postmaster-General had told them that this Bill only authorised expenditure upon telephones, but he would remind him that there was not a single word in the Bill about telephones, and that there was nothing to prevent him from spending the whole six millions on telegraphs. The Bill which authorised the right hon. Gentleman to spend six millions of money went back to days before telephones were invented, inasmuch as it referred to the Act of 1863, when telephones did not exist. A much more serious matter was that they had no statement before them as to how the money was to be spent. The right hon. Gentleman had no doubt made a very eloquent and lucid speech in twelve or fifteen minutes, and as he wanted £6,000,000 that was at the rate of something like half a million for every minute he spoke. In his judgment, however, the House should have a little more explanation of what this money was required for, Surely in the case of a Government pledged to economy the House of Commons ought to have a little more explanation. In such a case as this a private company would issue a prospectus, false or otherwise, showing how they proposed to apply the money which they asked the public to subscribe, but in this case they had no details. A demand for £6,000,000 was chucked at the House of Commons on a Friday afternoon without any explanation. The Bill was, moreover, a particularly bad illustration of the vicious practice of legislation by reference; it was a deliberate attempt to to evade examination by the House. This was a Loan Bill, but nowhere was the word "loan" mentioned. It was only when they hunted up the Telegraph Act of 1892 that they found that the Postmaster-General was entitled to borrow this money. It was a very serious thing for them to go into the market and borrow £6,000,000. That represented more than the whole sum hitherto spent on telephones, namely, £5,750,000. The Postmaster-General had said that the amount so far raised for telephone purposes was £7,300,000, and he supposed the difference between the figure he had quoted and that figure represented the unspent balance.


said the figures given by the hon. Member were up to March, 1906. The figures he gave were up to March, 1907.


said he begged the right hon. Gentleman's pardon. He did not catch the figures 1907. That explained the difference. The Post Office claimed that telephones were worked at a profit and telegraphs at a loss. It was very difficult to believe that. The accounts were hopelessly mixed up. The telephones were conducted in the same offices as the telegraphs and other Post Office business, and the same girl was sometimes occupied in selling stamps, sometimes receiving telegrams, sometimes issuing Post Office orders and postal orders, and sometimes conducting telephone business. Therefore it was exceedingly doubtful whether an accurate account had been furnished or could be furnished of the cost of working the system as between telegraphs and telephones. The Post Office officials, moreover, had a distinct motive for showing that there was a profit on telephones, because they were working in competition with a private company which paid a good dividend. If the Post Office officials did not show good figures in regard to the telephones the public would very naturally ask why it was that a private company charging the same prices made a profit while the Post Office made a loss. Therefore the Post Office had an interest in overcharging the telegraph accounts and undercharging the telephone service. There were, moreover, extraordinary discrepancies in the accounts. He would first take the figures from the appendix of the Postmaster-General's Report. There were three separate accounts, relating respectively to trunk lines, London exchanges, and provincial exchanges. The capital for trunk lines was stated at £2,897,503 at page 86, but a footnote at page 89 gave it as £3,197,000. At page 85 the capital given for the London exchanges was £2,232,588. From a footnote on page 87, however, it appeared to be £2,305,000. The capital for the provincial exchanges was at page 86 given as £403,195 while the footnote at page 88 gave it as £388,000. Then in regard to depreciation he found at page 87 the life of plant at the London exchanges taken at thirty-three years. Was not that an extravagant estimate considering that the industry was rapidly developing and the instruments used were constantly being superseded? In his judgment that was a very enormous period at which to fix the life of the plant. When he came to the trunk lines, however, which were dealt with on page 89, he found the life of the plant was valued at twenty-nine years. Depreciation ought, therefore, to be calculated at slightly over 3.4 per cent. The Post Office took the figures and worked them out at £88,901, whereas he made it £108,698. This probably explained why the Postmaster General had recently refused to answer a Question of his which involved some calculations in compound interest. Naturally the Postmaster-General would be shy of attempting compound interest when the officials at the Post Office were unable to do simple interest sums.


denied that he had said that the officials at the Post Office could not do sums of simple interest. His Answer had been that the figures which the hon. Gentleman wanted could be found from the returns and tables which had been supplied to the House.


said that what he had gathered was that the refusal to supply the information was due to the reluctance of the officials to tackle sums. He would take the figures, however, as they were. The whole balance which the Post Office officials claimed on the whole account was £43,000, which was about 1 per cent. profit on the capital invested.


Three per cent.


said that what he meant was 1 per cent. profit after paying 3 per cent. interest. His point was that it was not good business to borrow money on State credit, at 3 per cent. interest, and then only make 1 per cent. profit out of it. It was very bad business indeed, because the National Telephone Company borrowed money by way of debentures at 4 per cent. and paid a dividend of 6 per cent. on their share capital Although they charged the same rates for telephonic communication as the Post Office. In addition the National Telephone Company paid a royalty equivalent to more than 2½per cent. on all its capital to the Government. Moreover the Telephone Company paid local rates which the Postmaster-General escaped paying. The right hon. Gentleman complained that he had to provide plant, a good deal of which remained idle, but that was one of the peculiarities of all telephone business. The Post Office profit of 1 per cent., moreover, was only arrived at by the palpable fraud of taking the life of the plant at thirty-three years. He contended that the figures as a whole were such that no commercial company would tolerate for a moment. He turned to another source of information. That was the Return which the right hon. Gentleman produced at his request, and in connection with it he would like to acknowledge the courtesy with which the right hon. Gentleman and his officials had met his various suggestions and the great trouble they had taken to give the figures which he wanted. It was, however, quite hopeless to get a complete account out of the materials provided, but what he had obtained was sufficient to show that this undertaking was not and had never been worked as a business undertaking. There was no proper capital account and items of capital were mixed up with revenue. He ought to explain that the telegraph and telephone accounts were merged together and did not discriminate between the two services. He also wished to refer to the royalties paid by the National Telephone Company. They amounted to £271,000 odd last year. It might be perfectly justifiable for the Government to make the Telephone Company pay a royalty, but the right hon. Gentleman the Postmaster-General ought not to take credit for that as earned money. The sums received were sheer blackmail; justifiable blackmail it might be, but the sums ought not to go to the credit of the Postmaster-General as earnings; they ought to be treated as part of the miscellaneous revenue of the Exchequer. The last year's payment of royalties represented the equivalent of more than 2½ per cent. interest on the capital of the company, yet in spite of this annual drain the company succeeded in paying a dividend of 6 per cent. on its share capital and 4 per cent. on its debentures, while the Post Office, according to their own statement, only made a profit of 1 per cent. over and above the 3 per cent. on their borrowed capital. The blackmail levied upon the National Telephone Company was the result of the Post Office monopoly in the means of electrical communication. At the time of the original proposal for the purchase of the telegraphs in 1868 the idea of a monopoly was scouted and everybody said it would be intolerable to grant one. The provisions establishing a monopoly were subsequently slipped into legislation at the request of the Post Office. The monopoly was afterwards applied to telephones in order to get a sum of money from the Telephone Company for an invention which did not exist when the Act was passed. The aggregate total of the blackmail in the way of royalties which had been levied was over £2,000,000 which ought all to be credited to miscellaneous revenue. Nowhere was there a full statement of the capital expended on telephones and telegraphs, though there was a small footnote at the bottom in which it was said to be £22,299,000; that, however, did not take into account the loss of interest in previous years. But ignoring for a moment loss of interest, and merely adding to the figure given in the footnote the sum of £2,043,783, the royalties paid by the National Company, and the sum of £6,470,000 shown on another page of the Return as the aggregate of the past annual deficiencies, they obtained a figure of £30,824,000. But was it right to ignore the loss of interest? It was difficult to get a precise analogy to the transactions of a business firm because there was no share capital. Let the House, however, imagine the analogy of a private firm working on borrowed capital and backed by a wealthy banker. In this case the British taxpayer was the banker and the Postmaster-General the private firm. If he had to draw upon the banker he ought to pay interest upon all the moneys advanced to him. In other words, there ought to be compound interest allowed on all previous advances and deficiencies met by the taxpayer. If compound interest were charged it would bring up the total he had mentioned to £34,000,000. Of this sum £16,000,000 had been borrowed, and the remaining £18,000,000 had been advanced by the taxpayer. Taking the interest on that sum at so low a rate as 3 per cent., it ought to yield £540,000 a year. Instead of this return in the way of interest we had a loss of £353,000, which with the royalties, £227,000, made a total of £580,000. Thus instead of earning £540,000 we were; losing £580,000, which made the taxpayer out of pocket by the transaction to the extent of £1,120,000 a year on a capital expenditure of £34,000,000. He thought that a very serious state of things indeed. It was said that what the State lost by its telegraphs it gained on its postal service, and could afford to do so, but that was not a conclusive argument because the two services might be booked by separate departments as in India. Moreover, he would like to know why poor people who wrote letters and never sent a telegram should be taxed and be compelled to pay for the luxury of rich people who sent telegrams in order to save themselves the trouble of writing letters. Among the largest patrons of the telegraph system were bettors on horse racing. Why should the House of Commons be invited one day to pass a Bill to put down betting, and the next day to subsidise betting telegrams? Press telegrams were sent for Is. per 100 words and 2d. for every repeat of a message. He did not see why the State should subsidise newspaper proprietors. Being a journalist himself, he happened to know that a great deal of this "stuff" was absolutely useless to anybody. On reaching the newspaper offices it was thrown away and the nation had to pay for telegraphing it. If a loss was justifiable, why should they stop at £1,000,000; why not go on until the whole of the Post Office surplus was absorbed? The Postmaster-General did not venture to argue that a loss was justifiable. On the contrary he professed that though the telegraphs were now past praying for ho was going to make the telephones pay. But exactly the same profession was made in regard to the telegraphs. The author of the purchase of telegraphs in 1870 was Mr. Scudamore, and he, when cross-examined by a Select Committee in 1868, assured that Committee again and again that the telegraphs in the hands of the Post Office would be self-supporting from the start, and would ultimately be a considerable source of revenue. That view was sustained by the then Chancellor of the Exchequer, Mr. Ward Hunt, in the debate on the Second Reading of the Bill for buying up the four telegraph companies. That Gentleman said that the net revenue would suffice to pay interest on purchase money, and would repay the debt in twenty-nine years. The Bill was rushed through Parliament, and the companies got excellent terms, but not excessive in view of the large profits they were then earning. Incidentally he would like to point out to the House that the very threat to purchase the companies had added to their profits, because it had compelled them to abstain from extending their capital outlay, and had also frightened away possible competitors So that during two or three years before purchase the companies were doing an increasing business without increasing their capital, and thus were able to secure high dividends. Before the threat to purchase, the competition of the different companies had reduced the rates by half in the short space of ten years. The opposition of the companies to the purchase was bought out by the high terms offered by the Post Office, so that no hostile evidence was put before the Committee. There was also the curious fact to be noticed that it was not until the terms had been settled that the Post Office and the Treasury officials realised that the companies had only a leasehold interest in a large part of the property. The railway companies had a reversionary interest in the poles and wires erected beside railways, and after the Government had paid to the telegraph companies the terms agreed upon, it had to pay the railway companies for their reversionary interest. But that bad bargain did not explain the present loss. It explained it only to the extent of £50,000 or £60,000 out of a total loss of a million a year. The present loss had been due to the necessary incapacity of a Government Department to manage a business concern on business principles. To prove that there was no desire to run the system at a loss, it was sufficient to mention that the Post Office before carrying the telegraph to villages insisted on guarantees from private persons or local authorities. These guarantees had to provide for the whole of the working expenses, for a sufficient sum to repay capital in seven years, and for a margin for contingencies. It was interesting to compare the period of seven years which the Post Office used to insist upon when supplying telegraphs to villages, with the period of thirty-three years now officially put forward as representing the life of telephone plant. These terms, exacted for many years by the Post Office to protect itself against unprofitable business, were harsher than any private company would have dreamt of exacting, and yet the Post Office could not make a profit. Moreover, the Post Office, by virtue of its monopoly had been able to obtain the benefit of all the inventions made by outside enterprise. Duplex telegraphy had almost doubled the value of the Post Office capital invested in poles and wires; quadruplex telegraphy had further added to the value of the plant. The invention of automatic instruments had rendered possible an immense reduction in the working costs. In 1891 the Postmaster-General reported that the Wheatstone Automatic Receiver enabled 400 words to be sent safely per minute as against sixty or seventy under the old system, and yet the working cost was constantly increasing. The Post Office, armed with a monopoly, able to buy upon its own terms the inventions of all the world, had gone on losing more and more money every year. Before flinging good money after the bad the House should know exactly where they stood. Let them have the accounts put in a business shape, so that the losses could be detected, and the leakages stopped. Socialists were equally interested in this matter. They believed that State management was better than private management. They could not afford to have their theories discredited by this scandalous example of waste and inefficiency. He did not accept those Socialistic theories, but he was much more concerned for the efficiency of the public service and the economy of the national revenue than about any theories. He was willing to work with any man, whatever his theories might be, who would join with him in insisting that this gigantic Department, which controlled the most marvellous inventions of the human mind, should conduct its business on business principles for the benefit and for the credit of the nation. He moved.

MR. RIDSDALE (Brighton)

said he rose to second the Amendment, mainly on the grounds that it was most important in the public interest before this £6,000,000 was voted that the House should have a business-like statement from the right hon. Gentleman of how the business of his Department was conducted. The hon. Member for Preston had given a long history of what had taken place with regard to the telephones, but he (Mr. Ridsdale) would venture to point out that the Postmaster-General was not responsible for the arrangement made by one of his predecessors for the taking over of the telephones, and it would be wrong to blame him for that. But when the right hon. Gentleman came to the House for the purpose of borrowing money to expend on the development of that system he must in justice advance some business-like proposition as to the profit likely to be gained by the State by the operation. So far as he could see from the figures, it appeared to him that the telephone system, at present, was run not at a profit, but at a loss. The number of messages sent upon the combined telephone systems had increased by 10,000,000 during the last ten years, and that being so, one would have supposed that on the very much increased turnover a well-conducted business would have been able to effect a saving on the cost, and that the cost of 1,000 messages sent now would be less than the cost of a corresponding number of messages sent in the past. But if hon. Members looked at the figures they would find that whereas the expense per 1,000 messages, telegraph and telephone, was £34 in the past, it had now risen to £42, or an increase of nearly 20 per cent. in ten years. He did not see how that increase in the cost could have been due to the telegraph messages, and thought it must have been due to the telephones. As the right hon. Gentleman had fairly and frankly admitted that it was necessary to run this Department on business lines, he thought the House was entitled to some more business-like statement from him. Another thing to be considered was that the credit of the country was not so good now as it was five years ago, and he thought the right hon. Gentleman might find some difficulty in obtaining his £6,000,000 on the top of the £5,000,000 already guaranteed by the Government for the Transvaal.


said the loan was to be spread over four years.


said he was very glad to hear that, but knowledge that the Government required money was still in the money market, and he was not sure that the knowledge was not quite as detrimental as the obtaining of the actual money

Amendment proposed— To leave out from the word 'That,' to the end of the Question, and add the words ' it is undesirable to authorise further capital expenditure upon telegraphs or telephones until a full statement has been presented to Parlia- ment showing the financial results of the past; working of the Post Office telegraphs and telephones judged from the standpoint of an ordinary commercial undertaking.'" — (Mr. Harold Cox).

Question proposed, "That the words proposed to be left out stand part of the Question."

*MR. JOWETT (Bradford, W.)

said it was a most unexpected occurrence for a Member holding the views he did to find himself somewhat in agreement with the hon. Member for Preston, but he thought the case which the hon. Gentleman made out with regard to the management of the Postmaster-General's Department was mainly sound. As one who honestly believed that public management was more economical and more advantageous than private management he desired to say that the extravagant and foolish transactions made years ago by the Postmaster-General's Department, and to which the hon. Member had referred, could not be properly attributed to the principle of public management or to the methods necessarily attached to public concerns. They should be attributed rather to the fact that we were endeavouring to run a huge Department on lines that were absolutely impossible of success from a business point of view. Theoretically this huge business, with its £7,000,000 or £8,000,000 a year of salaries and wages, with all the ramifications of so vast a concern, was controlled by a Postmaster-General who probably had had no previous experience of the details of the business itself. But as a matter of fact it was the permanent official who ran the business. Hence it was no matter of surprise to know that time after time the interests of the State had been given away as a kind of present to interested parties, while the officials had taken undertakings from private individuals at a price that ought never to have been paid. Certainly the public and Parliament had never agreed to them, for the custom had invariably been for the bargain to be made first, and the House called upon to sanction it afterwards. He contended that it was necessary to bring these arrangements before Parliament first, and not to leave them to the permanent officials and the theoretical control of the Post-master-General. Public control should be real and effective in its character, If the right hon. Gentleman wanted to secure a proper Government administration of this business for the benefit of the public let him ask for a Committee of Members of this House to associate themselves with him. In no other way could the public secure effective control over the Department. He supported the Amendment.

VISCOUNT TURNOUR (Sussex, Horsham)

said he rose to support the Amendment proposed by the hon. Member for Preston, whom he congratulated on the very clear and able speech in which he had put his case before the House. If he might say so, the many clear, able, and interesting speeches which he had heard from him on all but one subject made him regret that he illustrated in his person the truth of the medical dictum that the ablest and most level-headed people were capable of forming a sane judgment on all subjects but one. He did not know whether the House would agree that they had hardly had a sufficient statement from the Postmaster-General as to how the money was to be spent. In any case this was not a Bill which should pass its Second Reading late on a Friday afternoon. He agreed as to the difficulty of comparing the working of the Post Office telephone system with the working of an ordinary private company, but at the same time it was plain that the result of the working had not been successful, seeing that for the year 1904–5 the difference between the receipts and working expenses was over,£100,000. However difficult it might, be to compare the working of Post Office telephones with the working of an ordinary public company it was easy to see that the working has not always been attended with success. One of the excuses commonly given by Socialists and others for loss on municipal enterprise was that that loss was small as compared with the benefit conferred upon the poorest people. Such an excuse would not certainly be put forward for loss on the working of the telephones, because no one by the greatest stretch of imagination would contend that telephones necessarily conferred a boon on the poorest people, and personally he thought it was of the utmost importance that the precedent of the working of telephones should be looked into most carefully. Nor could it be contended that the working of the telephones as yet had been in any way democratic. It had been exceedingly difficult in some villages and other places to obtain a telephone system, very hard conditions being very often imposed. He thought they had heard very little justification for the Bill, and be hoped the right hon. Gentleman below him would be able to find more excuse for the action of the Post Office and for bringing the Bill forward than the Postmaster-General himself had been able to do. One remark of the hon. Member for Bradford he did not quite understand. The hon. Gentleman seemed to complain that the Post Office was run by permanent officials. The moment before he complained that in his opinion Postmasters General frequently had had no previous experience of working the Department. The hon. Member could not have his cake and eat it. Somebody must be in charge of the Department who had had some experience of working it.


I said that theoretically the Postmaster-General controls it. In reality owing to the limitation of the best of Postmasters-General the permanent officials work it.


said he agreed to a very large extent, but he understood the hon. Member to complain that that was the case. No one could complain, first of all, of the Postmaster-General having no previous experience, and then that the Department was worked by those who had experience. What Committee of the House would be capable of controlling the Post Office? He would be sorry to see it working under a Committee. He did not think the hon. Member was quite fair in that respect to the proposal, and he was sorry to hear him blaming the permanent officials. He hoped the House would support the Amendment if only on the ground that this was a big question, that they had not had a full statement of how the money was to be spent, and that it was not a Bill which should be passed late on a Friday afternoon.


said the House must have been struck by the ardent views of the hon. Member below the gangway, and it illustrated the vicissitudes of political life when they found the hon. Member for Preston, the great disciple of Cobdenism, rubbing shoulders with the leading exponent of Socialism. The Postmaster-General in a brief summary had informed the House of the reason why he required this £6,000,000. He had based his demand on telephones, but there was not a word in the Bill about telephones, and before the House acceded to the demand of the right hon. Gentleman it was right to ask whether his Department carried on its telegraphs and telephones on sound business principles. He made no reflection on the administration of the right hon. Gentleman. He believed that according to his lights the right hon. Gentleman did more to advance the public interest and convenience than any other Minister, but at the same time he had been following the procedure and adhering to the traditions of the past, asking for as much as he wanted and giving as few details as possible. He was apparently on this occasion asking for more than he wanted at the moment, because the Bill asked for not only the £6,000,000 but the produce thereof. He heartily concurred in the observations of the hon. Member for Preston who was the high priest of individualism, but as to the suggestion that all those concerns that private competition was more able to carry out should be withdrawn from the State, that was far from being his opinion. All he said was that it was the province of the House vigilantly to scrutinise the expenditure of large sums of money, and where it was not fully satisfied that the sums were properly laid out for the public service to ask for further information.

*MR. LUPTON (Lincolnshire, Sleaford)

said he had listened with much attention to the speech of the Postmaster-General, and in his opinion the right hon. Gentleman had nothing to withdraw. There was however one part of the speech to which he took exception and that was where he agreed with the hon. Member for Preston. The right hon. Gentleman said a Government Department ought to be run as a business concern. That in his opinion was a fatal error. A Government Department which rested on a monopoly could not be run in the same way as a company or a private concession. The object of a man of business was to make a profit, but that of a Government Department was to accommodate the public and to carry on the business of the public. The post, the telegraph, and the telephone were required in every village. They wanted all the people of the country to have every convenience that could possibly be given to them. If the Government had never interfered and left these businesses to those who started them it would have been another matter, but what the Government had to consider now was not the making of a profit but the conferring of the greatest benefit on the public. He thought these things would have been much better conducted if they had remained in the hands of private enterprise, that the nation would have been much better served and the Government would not have lost so much money. But the question now was, was the business carried on well or ill? The loss of £500,000 a year was a comparatively small matter when it was considered that the business of the nation depended on the proper execution of the Department. The business represented a value of £2,000,000,000 a year or more. Our power to carry on this great national concern to the best advantage and in competition with foreign countries depended on our facilities, and the Government must consider not the mere profit of this Department and that Department, which was simply a matter of book-keeping, but the business of the nation as a whole. A business department often showed a loss, when the result of its working really was a profit. For instance, a railway might be made to develop some country, and by its construction the value of the land might be multiplied fivefold, and a large, prosperous, and happy population might be settled on it, whilst at the same time the railway company itself might be a loser, and the shareholders got no dividends. But still, the railway would be profitable to the country. In the same way, as long as the Government claimed and possessed a monopoly of the post, telegraph, and telephone, those Departments must be conducted so as to facilitate the trade of the country and accommodate the social life of the people, so that not only the rich but the poorest of the poor should have the benefit.


said that in his opinion there could be no more unfortunate way of conducting a business of this kind than that suggested by the hon. Member for West Bradford. No one had a greater respect than he for hon. Members of the House and their talents, but to suppose that twelve or fifteen hon. Members would be able to conduct with efficiency a complicated business like that of the Post Office was absurd. The right hon. Gentleman in his introductory remarks had attempted to deal with the present position, which he admitted was not satisfactory, and said that an inflated sum was originally paid for the telegraphs. No doubt a good deal more was paid than would be paid by a business man, but that it was an inflated sum he denied, because the result showed that out of the first year's working the whole of the interest was met out of profits, and £120,000 set aside for the reduction of the debt, whilst £4,000 was spent on buildings, etc. Therefore any loss that arose from the working of the telegraphs did not arise from the initial sum spent in acquiring them. The hon. Member for Preston had shown that it was very difficult to ascertain whether it was the fact, as the right hon. Gentleman had stated, that there had been a profit made on telephones or not. The accounts had been so mixed up that it was extremely difficult to separate the items. He would like to know, if it was the fact that the number of messages sent had been increased every year and was larger now than ever before, how it was that there was this loss. If the business had increased, and if they had more economical appliances for carrying it on, he failed to see why there should be any loss at all, unless there was bad management on the part of the Post Office. He was not at all sure, however, that it was fair to say that the management of the Post Office was bad. The conclusion he had drawn was that which the hon. Member for Preston had arrived at, viz., that for some reason or other the Post Office officials were more desirous to favour the Post Office than the telephone system. It appeared extraordinary that there should be a loss on telegraphs and not on telephones, and he thought there must be something in the idea that the Post Office officials were desirous of showing that the telephones were not altogether working at a loss. In the Bill there was nothing about telephones, and there was nothing to prevent the right hon. Gentleman from spending the whole of this money on the telegraph service, except his statement that he would not do so. He contended that no Minister should be allowed to say he was bringing in a Bill to appropriate £6,000,000 in that manner. Supposing an election took place and the present Government did not come back to power; what was to bind the new Postmaster-General? He could not be bound by assurances given across the floor of the House by his predecessor. It was a very little Bill, and of little Bills he had his suspicions. He also saw there was in it legislation by reference, and of that too he was always suspicious. Let them consider what it was they were going to do with the £6,000,000 when they got it. It must be remembered that in four years time they were committed to the purchase of the National Telephone Company's system. That arrangement was entered into by the right hon. Gentleman's predecessor in 1905, Lord Stanley. The price was to be fixed by arbitration. When Lord Stanley was asked about what price the arbitration would fix he declined to reply, on the ground that his answer might prejudice the arbitration. He however had gone to the library, and had found out that the capital of the National Telephone Company was £10,200,000, and he might safely presume that that would be the amount given by the arbitration to the company. It followed, therefore, that in the next four years we were going to spend £16,000,000 on the telephone service. If the service up to 1902 was unprofitable, the best thing the right hon. Gentleman could do would be to withdraw this Bill and substitute for it one more moderate in character. He did not say it was not necessary to allow the right hon. Gentleman to raise a certain amount for absolutely necessary improvements and additions, but £6,000,000 was a much larger amount than should be sanctioned for that purpose. And, in view of the fact that in four years the whole of the National Telephone Company's system must came into the hands of the right hon. Gentleman, it would seem to be wiser to wait until he had control of the whole of the telephone systems, before he committed the country to so vast an expenditure. The telephone system was going on all right now, and so far as he knew there was no object in assenting to the Bill now.

And, it being Five of the clock, the Debate stood adjourned.

Debate to be resumed upon Monday next.